Business and the Business Environment Analysis Report for Tesco

This report provides a comprehensive analysis of Tesco's business environment, encompassing various organizational aspects. It begins by examining the purpose, types, and legal structures of organizations, differentiating between public, private, and voluntary sectors, with Tesco, National Health Service, and Oxfam as examples. The report then explores the size and scope of different organizational types, including micro, small, medium, global, multinational, international, and transnational corporations. It further investigates the relationship between different organizational functions, such as marketing and finance, and their link to organizational objectives and structures. The analysis extends to the macro environment, identifying its positive and negative impacts on business operations, supported by specific examples. Internal and external analyses, including strengths and weaknesses, are conducted. Finally, the report explains the interrelation of strengths, weaknesses, and external macro factors, offering a holistic understanding of Tesco's position within its business environment. The report concludes with references to support the analysis.

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Purpose and different type of organisations and adoption of legal structure........................1
P2. The size and scope of different type of organisation............................................................2
TASK 2............................................................................................................................................3
P3. The relationship between different organisation function and their link to organisational
objective and structures...............................................................................................................3
TASK 3............................................................................................................................................4
P4. Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples................................................................................4
P5. Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses............................................................................................................6
TASK 4............................................................................................................................................9
P6. Explain how strengths and weaknesses interrelate with external macro factors..................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is a combination of various internal & external factors which focus
on influencing every company's operations. Such factors are very important for company and at
same time very crucial also as they are affecting company's internal management and overall
functioning. Some of they factors present n macro environment are environmental, social,
political, suppliers, customers, competitors, all other stakeholders which are related to company
directly or indirectly play a very important part in taking various decision for regular and smooth
functioning of company.
Present report is based on Tesco which is a super market company, and it was founded in
year 1919. Jack cohen was the person who laid the foundation of this company. This report is on
some important topics such as size, scope, structure based on analysis of external environment of
Tesco. Such factors affect a company both in negative and positive manner (Virglerová, Dobeš
and Vojtovič, 2016). This report is based on purpose of organisations and their legal structure,
along with the size and scope of such organisations is also being mentioned. Relation of
organisation with the overall organisation structure is being discussed. Positive and negative
impact of macro environment is analysed in detail and lastly the strength and weakness of the
company with the overall external environment is discussed.
TASK 1
P1. Purpose and different type of organisations and adoption of legal structure.
This task will be cover different types of organisation with its purpose, scope, legal
structure. There are basically three types of organisation which are public, private and voluntary.
Every company is founded and started with some laid objectives and a vision in mind.
Such vision actually sets the whole guideline for various strategies and plans which company
will undertake in its due course of actions. These factors help in creating a goodwill and brand
image in market. This helps in economic growth of company and country at same time.
Public Sector: It is a type of organisation that includes those enterprise which are owned
as well as financed by the legal authority on the behalf of general public. These are those
companies which are controlled and are under regulation of government of country. Such
companies do not focus on profit maximization but they are build up to serve the people and
satisfying their needs. There are many problems which are faced by people and for solving that

problem a business opportunity is identified and then a venture is created. National health service
is also one such organisation, which is providing employment to approximately 1.6 million
people. Main objective of this company is to improve health of their patients. Government
controls all their operations. Examples: Automatic Weapons Establishment (AWE), BBC,
British Army are best examples and those comes under public sector. and they are considered to
be biggest retailers of UK.
Purpose: Main purpose of public organisation is to give services to general public by using the
resources optimally. Major objective here is to help the public and for improvement of overall
health conditions of people. .
Legal Structures –
Central Government –In National health services the main government performs th efunction
of gathering funds in form of Income Tax from the public.
Local Government – The second delegation entity performs the function of gathering amount of
capital in the form of Community Charges which are known as Council Tax.
State Government – In National Health Services, this stage has the powers or authority which
are applicable on specific departments.
National health service is a central government owned public sector organisation.
Private Sector: In this sector different organisations have been included which are
established as well as controlled by the private individuals. These are organizations which belong
to a country's economy and help in growth and development of industrial sector. They are
controlled and managed by the private sector or private individuals and government has no role
to be played in management of company. Tesco is one such company which is located in UK and
they are having many convenience stores, hyper markets, super markets. There are approx 3000
stores in UK of Tesco and they are considered to be biggest retailers of UK. Examples: Walmart,
Tesco, M&S, ALDI are best examples and those comes under private sector.
Purpose: Private sector has aim is to earn profits and to give adequate competition to the public
sector organizations. As it will leads them to enhance efficiency and effectiveness. Tesco has a
major objective to fulfil the needs of their target segment of customers.
Legal Structures – Tesco follows a legal structure which is hierarchical structure which consist
of regional manger, store manager and then various food trading and non food trading manager,
personnel manager.

Sole Proprietorship : In this an individual provides goods and services to the client with the
motive of earning profits.
Partnership : A partnership is a kind of organisation that have more than one individual. The
legal obligations within partnership are similar to sole trader.
Limited Company : The organisation require to be certified to become a limited company.
Shareholders acquire the profits in the form of dividend.
Tesco PLC comes under the limited company which is governed by company laws.
Voluntary Organisation: This type of organisation involves group of persons who
willingly come into an agreement to form an enterprise in order to attain a objective. There are
some companies who do not want to earn monetary profits but they want to fulfil other
objectives which are for benefits of people living in society. Oxfam is one such company which
is involved in doing social service and not to earn monetary profits. Main objective of this
company is to eradicate or at least minimize poverty in their country. There are around 20
independent companies which are part of Oxfam and the are working under it. All their
operations and functions are taking place under this company who controls their overall
functioning. They work for benefit of people and upliftment of society. They make efforts to
create employment opportunities for people so that they are able to earn a living and ensure their
survival. Examples: Save the Children International, Welcome Trust, Oxfam are best examples
and those comes under private sector.
Purpose: Main purpose of this organisation is to work for the betterment of social welfare. From
the wider context point it can be said that they work for betterment of the society and people.
Legal Structure –
Trust – It is not a legal enterprise which means they cannot come into any agreements or written
documents it their own name.
Unincorporated Association – There is no restriction of liability as they come in the agreement
on the stead of charity and are personally liable.
Oxfam comes under trust.
From the above discussion it can be summarized that each organization whether it is
public, private or voluntary has some specific legal structure and they have wide purpose which

helps in ensuring clarity for the whole organisation related to what work has to be done and in
the way it has to be completed.
P2. The size and scope of different type of organisation.
There are three basic categories in which companies are divided that is voluntary, private
and public. There are other differentiations also on which companies are distinguished, based on
company's productivity and their turnover (Sodeyfi, 2016).
TESCO
Vision & Mission- Tesco has a vision that they want to becoem one of biggest
supermarket chains of UK.
Size & Scope- There are around 700 stores and they are giving employment to 5 lacs
people in across world. Tesco has a very wide scope of growth as they posses a transformation
strategy which will help them in achieving long term growth and development.
Organisation Structure- Tesco structure is hierarchical which includes regional
manager, then store manager and food division manager, personnel manager. All such divisions
he;lp in smooth functioning of all major functions of company.
National Health Services:
Vision & Mission- Company has a vision to ensure healthy living of people.
Size & Scope- Around 15 lacs employees are employed in this company. It is at fifth
number in terms of giving employment to people.
Organisation Structure- they are having a “Tripartie Syssytem” which includes hospital
services, dentists & opticians and third part structure includes maternity, ambulance etc.
Oxfam
Vision & Mission- They have a vision to fulfil the very basic needs of people and help
them in bringing a change in their lifestyle.
Size & Scope-There are around 20 organizations which are functioning in around 90
countries. Company has been successful in achievement of their aims and set objectives.
Organisational Structure-They have a council of members which have trustees who
govern activities, functions and operations of company.
Micro: Micro businesses are organisation with annual sales as well as assets valued at less than
$250,000 per annum and with fewer than 5 employees, including the owner. Examples: Barber,
cobbler are best example of micro business.

Small: Small businesses are privately owned enterprise, sole proprietorships or partnerships that
have fewer workers and/or less annual revenue. Examples: Prime people, innovate UK,
Brightstar Financial are best example of small organisation.
Medium: Medium-sized organisation are characterized within the Companies Act 2006 as a
enterprise with up to 250 employees. Examples: Verdant Leisure, Captify are examples of
medium based organisations.
Global organisation: An international alliance involving many different countries are known as
global organisation. H&M is a global organisation in United Kingdom.
Multinational organisation: A multinational organization is an organisation that owns several
units of production in different countries. TESCO is a multinational company in UK.
International organisation: An international organization is a type of organization that
established by a treaty as well as many other instrument which is governed by international law.
Dell EMC is an international organisation.
Transnational corporation: It is a type of organisation is a huge company that does business in
several countries. McDonald is a transactional corporation in UK.
Therefore, above mentioned information determine size, scope, types, purpose and legal
structure of public, private and voluntary sector organisation.

It can be summarized that each organization has its definite size and structure according to which
they function. The overall size determines the position of the organisation in the external market.
TASK 2
P3. The relationship between different organisation function and their link to organisational
objective and structures.
As every function have their specified roles and responsibilities that put positive impact
on executing business activities in an effective manner. In this regards, there are various function
within the Tesco perform their roles and responsibilities are as follows:
Marketing: It is one of the important function through which company promote their
products and services with the aim of inviting more and more customers towards its services. In
context of Tesco, the main role of marketing function is to undertake market research, finance,
development of products, planning, distribution, selling and many more. All these are help in
increasing overall profitability level of the company at market place and also support them in
attaining competitive advantage from its rivals.
Finance: This type of function is also play a crucial role in executing business activities
in effective manner. As every task and activities of a company required enough fund so that all
the project and activities can be done properly. In context of Tesco, finance department help in
financial planning, reporting, controlling short term and long term business strategy within the
aim of attaining all the short term and long term goals in stipulated time frame. Along with this,
it also supports business organization in risk management that directly contribute in enhancing
overall performance of company at market place.
Research and development: In business organisation R&D is play a crucial role in
planning or implementing new programs with the aim of attaining higher success at market
place. In context of Tesco, research and development undertake an effective research with the
aim of analysing market trends and changes for producing their products accordingly. This can
be effective for business organisation in enhancing their market share and profitability level as
well.
HR function: Every business organisation wants to recruit skilled and talented workers so
that they can effectively perform their task and attain set goals as well. In this regards, the main
role of HR manager in Tesco is to recruit right people for right job for managing workforce

effectively. With the help of this, company can improve their performance level and at the same
time also attain their set targets in stipulated time frame.
Structure of every company is made in a way that it helps company in achieving their
objectives and goals. Four major structures of company are explained below:
Marketing and Finance:
Tesco is a supermarket company and they have a marketing department, main function of
this department is to increase sales of company, Finance department has the responsibility of
making budgets for different functions and operations of company. Events, marketing campaigns
are organized by Tesco time to time so that they keep their customers aware of various new
products company is launching, innovations they are doing all this requires funds. Such
monetary assistance is provided by finance department of company. Thus it becomes that there
are relation maintained between both these functional departments of Tesco which will help
them in achieving overall objectives set by company (Prajogo, 2016).
HR and marketing:
Human resource department has the sole responsibility to hire competent and qualified
people in company so that various functions take place in a more productive and effective way.
Marketing department provides information to the HR department of company related to the
skills they require employees for performing planned activities and various strategies being
decided by this department. Such information helps human resource department in making job
profile according to various vacant positions and then further recruitment is done.
Organisational structure
Organizational structure of Tesco is Functional structure. They divide their organization
in different departments according to different functions. All these functional departments help
in smooth running of organisation as a whole. Below is the flow chart which can help in
understanding this structure as adopted by Tesco (Otache, and Mahmood, 2015). there are
various organizational structures such as:
Functional organizational structure: In this structure the division is made on the basis of
various functions of the organisation. It can be based on finance, human resource, technical and
other functional units.
Horizontal organisation structure: This structure is adopted by small companies. In this
structure various levels of middle management are eliminated and productivity is tried to

increase in the whole organisation. Time is also saved in case of Horizontal organization
structure.
Matrix structure: In this there is a organizational management the reporting relationship are set
up as matrix or grid in the hierarchy of the company.
As Tesco follow vertical organizational structure in which power flows from top to the
bottom. The overall chain of command is well defined and moves from each layer to another.
This helps in having clear lines of authority and responsibility which helps in making of quick
decisions. They focus on different department within the business. With the assistance of this
company may easily execute as well as perform entire business activities and attain set targets in
systematic manner.
There are various types of organisational structures such as:
Global organizations: Such type of organisations have emphasis on cost, management, volume
production and maintenance of efficiency and management in the organisation.
Multinational organisations: These are those organisations which have presence in other
countries but the product offerings are not coordinated in all such countries. Focus is more on
Illustration 1: VERTICAL ORGANIZATIONAL STRUCTURE,2016

modification of products according to the requirements of the local market in which the
company is functioning.
Transnational organisations: These are more complex organisations AS they do investment in
foreign operations but there is a central location which is performing major functions such as
R&D, marketing functions, making of major decisions.
International organisation: These are organisations which are more complex. They make
investments outside the home country. They have presence across many countries in the world.
TASK 3
P4. Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
Tesco's management is required to use PESTLE approach so that they are able to analyse various
factors which are present in the external environment and affects their internal
management(Moroni, Arruda and Araujo, 2015).
Political factor: There are some political factors which affect every company which are mostly
related to political government of the country. Tesco is present in UK and political environment
of UK has a affect. UK government has started a new regulation related to taxation in the year
2011tehy started a new policy which lead to increase in VAT rates by 2.5% that is 20% which
was earlier 17.5%. this lead to reduction in disposable income with citizens of their country
because of t his sales of Tesco also show decline.
Economic factor: UK government is showing recovery from recession period. The are
experiencing higher growth rate in economic terms. In situation of recession the employment rate
of the country decreases people loose jobs or remain unemployed for a period of time. This
situation affects country's performance in a negative manner as people don't have adequate
income to spend so they are not able to use it for spending or purchasing of products. Such
economic situations in a country can have both positive and negative impact on a company's
productivity.
Technological factor: Technology is very critical factor which plays a very important part in
the process of supply chain in company. Tesco has been able to develop a effective supply chain

network so as to attaining a competitive advantage and also for attaining cost efficiency. This
will help them in having a differentiating advantage as compared to various competitors of
Tesco(Kolk, 2016). Due to advancement in technology, company can improve their
performance level that positively impact on the it profitability level by making its process simple
and smoother. On the other hand, technological advancement also may increase competition in
market some time it negatively impact on its brand image.
Social factor: Social factors are present in every country they rae related to society and affect
sales & profitability of every company(Khan, and Quaddus, 2015). For Tesco also they are
affected by the type of people of UK, like there is increase in number of old age people because
of baby boom generation. Also, there has been decrease in birth rate and increase in life
expectancy of people of united states. Tesco new plans and strategies are affected by the social
factors for example Tesco has make changes they are using e-commerce websites for their
products but using online source as a medium to purchase products requires to be technology
friendly, they rely on physical stores for fulfilment of their shopping needs. This is not the case
with old age people they face difficulties in using online source to purchase products this has
reduction in overall sales of company.
Legal factor: Legal requirements are present in every country which have to be compulsorily
adopted and followed by all companies working there. Tesco is also engaged in various financial
products such as credit cards, loans, savings and mortgages. Financial services act has been
implemented in UK which Tesco has to take into consideration when they are making various
strategies relation to these financial products. In context of this, Tesco follow all the law and
regulation of government that may positively impact on developing increasing customers base
and their loyalty as well. On the other side, if company does not follow all the legal regulation
then they responsible for paying fine as a punishment. This will negatively impact on its brand
image at market place.
Environmental factor: Environment is the place where every company is operating and
functioning. This factor plays a very crucial in ensuring proper functioning of company. Tesco is
a company which has a concern for environment this is reason why they have always adopted
measures which will help them in protecting and saving of environment. Sustainable